Iraq: UN Says Kuwait War Claims Now A Bilateral Matter

The spokesman for the UN compensation commission on Iraq says the country’s huge war debts to Kuwait are now primarily a matter of bilateral talks between the two neighbors. The panel last month approved its final claims against Iraq and will gradually phase out its work during the next 18 months. It has validated more than $52 billion of claims, the vast majority due to Kuwait. Iraqi officials view the compensation as crippling to nation-building efforts.

United Nations, 7 July 2005 (RFE/RL) -- The Geneva-based compensation commission says it is dispensing about $200 million each quarter to governments, private entities, and individuals hurt by the 1990 Iraqi invasion of Kuwait.

The new Iraqi government is seeking to suspend the diversion of 5 percent of its oil revenues to the compensation payments, a level mandated by the UN Security Council. Iraqi officials want an international conference to discuss the validity of such claims, which arise from the actions of a former authoritarian regime.

Commission spokesman Joe Sills told a news conference at UN headquarters on 6 July that the payments will continue. It is up to bilateral talks to settle the issue of whether more than $30 billion in unpaid claims will be paid out. Sills said important negotiations now loom between Iraqi and the major claimant -- Kuwait.

"It is safe to say without putting words into the Iraqis' mouth that they would want to and perhaps will be talking with the Kuwaitis about the bulk of these claims and if they can negotiate some sort of bilateral settlement," Sills said. "If you had Iraq and Kuwait work out an agreement on perhaps reduction or forgiveness of some of these large debts and they brought it to the [UN compensation commission on Iraq's] governing council, [it] will be a very quick approval."

It is not clear whether Kuwait is willing to forgive significant amounts of claims already awarded. At last week's meeting of the commission in Geneva, Kuwait's delegation called for "uninterrupted payments" to all successful claimants. RFE/RL requests for comment to Kuwait's UN mission on 7 July were not answered.

At present, the commission is receiving more per quarter -- around $270 million– than the $200 million it distributes, because of high oil prices. But the panel decided for now to keep the tab at $200 million.

Commission spokesman Sills says there was a reasonable concern about interest paid on the legitimate claims. The UN compensation commission on Iraq's governing council has decided that no interest will be paid because the payments could have reached astronomical levels.

"One decision the council has made, it was originally thought that interest would be an acceptable claim," Sills said. "They've now decided there will be no interest paid, so that takes that out of the picture. If you started compounding this money, you could really get into the stratosphere. But I really feel that there will be some bilateral arrangements, I think you can look for those and this amount will probably never be paid in full."

According to news reports, claimant countries such as Jordan and Saudi Arabia have expressed concern that if there will be a milestone agreement between Iraq and Kuwait for a significant reduction on the compensation on claims, it could affect their own standing.

The UN commission is scheduled to phase out its activities at the end of 2007. But at the current pace the payments are made it could take almost four decades for the payments to be made in full.

Sills said that there are now several options being evaluated for the payments program to continue after the closure of UNCC.

"We’ve made a number of proposals on that and that will be considered by the [UN] Security Council," he said. "The payments could be transferred to here in New York and handled by the headquarters. There could be a small office working on it within the structure of the UN office in Geneva. The Iraqis could do it themselves with monitoring by the Security Council but that's a good question because it have to be worked out how the payments are handled."

Individuals who are recognized as victims of Saddam Hussein’s invasion of Kuwait are first priority claimants followed by the private entities and finally by the big oil companies and governments. The final claims are also the largest.